re: Ann: The Ulaan Tolgoi Project Joint Ventu...
Think this is more fantastic news in an area of the world where it is happenning and companies are able to make these projects financially viable due to geographic positioning, labour costs etc. Below are seven good reasons to invest in companies betting on Mongolia, there are always risks and valuations in this sector aren't pretty in the current market but limited downside on this company. Good luck all.
1.Mongolia is recognised as one of the most resource-rich countries in the world, with significant reserves of coal, copper, gold and iron. Rio Tinto’s Oyu Tolgoi project is the largest and most headline-grabbing project, but other companies including Aspire Mining, Xanadu Mines and Voyager Resources (amongst other foreign companies) are also heading up exciting projects. To this point coal is by far the most exploited resource, but copper and gold are picking up speed in project development.
2.Mongolia has one of the world’s fastest growing economies – this is largely due to huge foreign investment into a variety of mining projects, demonstrating the country’s commitment to expanding its mineral industry. The country is forecast to have an annual GDP growth rate of 14% until 2020. This did slow in 2012 to 12%, after an incredible 17% in 2011, but the future will all depend on the launching of exports from Oyu Tolgoi. Watch this space….
3.The Presidential elections on 26thJune 2013 confirmed Mr. Tsakhiagiin Elbegdorj has beenre-elected to the position for another 4 years. The President is a free-market advocate and welcomes foreign investment to help drive the mining industry, although in recent time has seemed to move toward more of a resource nationalism approach. Time will tell if that was an election ploy, or if he is determined to rein in foreign control and profit. However, it is important to note that even if more stringent controls are placed on foreign investment profit share, this does not make projects commercially unviable – far from it.
4.Over 150 Australian companies already have a presence in Mongolia, between METS, EPCMs, exploration companies, major miners, law firms and consultants. All of these companies have seen the opportunity, with offices, regional partnerships, projects and/or investments. Cultural barriers are already being crossed by these early adopters and market leaders, with many difficulties already identified and being managed by them. For the next wave of companies forward thinking enough to make the jump, it will be a smoother path.
5.Infrastructure investment from the government is coming thick and fast. The lack of supporting infrastructure for mining projects in Mongolia has been a major concern for foreign investors. Power, water and transport infrastructure is all fairly lacking, but the government is committed to helping mining companies develop these in order to secure the country’s economic future. On top of this, mining companies are developing their own, such as Aspire Mining’s Erdenet to Ovoot Railway, all of which will help contribute to the country’s network and connectivity.
6.Mongolia has a big, but largely unskilled workforce – with lots of potential. Vocational training and education will be needed in abundance, if the country is to get to where it needs to be in support of the sector. It is a highly literate country, with about 98% of the population able to read. This is unusually high and is demonstrative of the country’s potential for skilled work.
7.The Mongolian climate is famously harsh, with temperatures as low as -55°C (it doesn’t even get that cold beyond the Wall in Westeros…) and as high as 35°C. Many sites are also extremely remote, making it hard for communications networks to function optimally. Therefore any companies with solutions that perform well under extreme temperatures, or weather conditions, or isolated locations, have a great opportunity to translate their products over to sites in Mongolia.
